Silver Price Forecast: XAG/USD cracks $60 as bears eye $56
- XAG/USD falls below $60, extending its bearish market structure.
- RSI approaches oversold territory as downside momentum gains traction.
- Break below $59 exposes $56.57, $54.77 and potentially $50.00.
Silver price extends its losses, following Gold’s path, as the latest Fed Minutes showed that officials expect another rate increase towards the year-end. The XAG/USD trades at $59.69, down by over 1.67%.
XAG/USD Price Forecast: Technical Outlook
Price action shows the white metal is neutral to downward-biased, as it remains below the 50-, 100-, and 200-day Simple Moving Averages (SMAs), each at $64.22, $64.28, and $72.78. Also, the market structure of lower highs and lower lows remains intact, while bearish momentum accelerates, as indicated by the Relative Strength Index (RSI), which is aiming towards oversold territory.
Hence, the path of least resistance suggests further downside. For a bearish continuation, XAG/USD must clear $59.00. Below, the next stop is August 3, low of $56.57, followed by the year-to-date (YTD) low of $54.77. Once those levels are taken out, Silver could reach $50.00.
On the other hand, for a bullish reversal, the first resistance for XAG/USD is the October 2 daily and monthly peak of $62.09. Once surpassed, the next stop is the confluence of the 50- and 100-day SMAs at $64.22-$64.28. Above is $65.00 ahead of the $70.00 psychological level.
XAG/USD Price Chart – Daily
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
Author
Christian Borjon Valencia
FXStreet
Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.
